It's time for region-wide development fees
by Jerry C. Harmon
very city in the region has "development fees" as a source of income to pay for the costs of capital improvements that will be needed as our populations increase in accordance with our General Plans and current zoning. The average fees per single family, four bedroom, two bath house in the region is approximately $20,000. However, no fees for capital improvements are currently being collected to my knowledge for : courts and jails, transportation, open space and recreation, health facilities, social service facilities, etc. We need to establish "Region Wide Development Fees."SANDAG predicts that there will be an increase in population of 1,000,000 people within the next fifteen years. Question: where will the money for the capital improvements to meet the needs of the additional one million people come from? Current public policy answers that question by expecting voters to pass bond issues, or have their taxes increased in other ways, if they hope to maintain their quality of life and protect their property values.
Perhaps it is time to change the old ways of doing the people's business. We can simply expand the already successful policy of making population growth pay its way by starting to collect region-wide development fees from every city in the region. These fees would be collected at the same time that we collect our respective local city development fees.
We have a proven model that works for cities, so lets expand it to the region. Further, we have a proven model that works to administer those new fees. For almost ten years, SANDAG has served as The Regional Transportation Commission to administer the half-cent sales tax fees collected for transportation. I suggest that we establish a "Regional Capital Improvement Commission" which should be SANDAG to do the same work for other vitally needed infrastructure. As we continue to collect development fees each time we issue a building permit in every city, and at the county permit counters, we could collect an additional fee to meet the needs of new courts and jails, new regional roads (the half cent sales tax has a sunset clause), open space and recreational facilities, health facilities, and other "to be defined" needed capital improvements.
To legally determine the fee rate, the new regional fee should be within the law defined by AB 1600. SANDAG should, as a regional body, first determine what our quality-of-life standards are going to be at the regional level (i.e., the number of courts and jails per 1,000 population, level of service on our regional roads, open space and recreational acreage per capita, etc). Once these standards are defined and agreed to regionally, our professionals can determine the revenue needed to build the necessary capital improvements to keep up with the demands of population growth. It will then be up to elected officials to run government like a business and set public policies that will protect the quality of life of our existing residents and businesses as we continue to absorb the predicted population growth. This can be done without continuing to ask existing voters to pass new bond issues or increase their sales taxes, gas taxes, or other taxes.
I acknowledge that this is easier to say than to do. There are significant opposing forces that want to maintain the status quo that spreads the cost of population growth over the existing tax payers. They are primarily the landowners and developers who have significant land holdings. Development interests continue to claim that "development fees" are passed on to the home buyer and therefore the price of housing is increased by such fees. This is a myth. It is true that "development fees" cost someone; but it is not primarily the home buyer, contrary to popular belief. Consider the following questions and (answers):
1. Does the market place determine the price of housing? (Yes.)
2. In a free enterprise society, do developers sell their finished product for whatever price the market will allow? (Yes)
3. If there were zero development fees, would developers still sell their product for what ever the market would allow? (Of course.)
4. There are five components of housing costs:
1. Cost of material
2. Cost of labor
3. Profit, and overhead
4. Development Fees
5. Cost of land
If material, labor, profit, and fees are the basic market-driven costs, what will an increase in "Development Fees" do to the value of raw land? (Lower it.)
5. So, isn't it true that the person who owns the raw land is ultimately the one who will absorb most of the cost of development fees? (Yes, unless the developer was a bad business person and overpaid for the land!)
6. Do you believe, therefore, that we should change the way we pay for capital improvements by collecting "development fees" up front rather than waiting for schools, roads, courts, jails, etc. to become overcrowded and then asking all tax payers to increase their taxes to "catch up," even if this means that it will decrease the value of raw land? (If you value your quality of life and your property value and want to minimize your taxes, the answer is YES! If you own raw land and want to get the most profit possible from your land the answer is NO!)
The above policy would make population growth pay its own costs in a more equitable manor. There is no moral or ethical problem placing the costs of future capital improvements on raw land owners, in my opinion; land is not worth what the market has valued it at due to the out-of-date public policies we now have in place. If we were not drastically increasing our population, existing policies would be sufficient. But when we realize we must plan to add another population increment equal to the size of the city of San Diego in this region within the next fifteen years, we need to update our policies.
|Jerry Harmon is a council member of the City of Escondido and is running against Bill Horn for County Board of Supervisors, District 5. Jerry was recently endorsed by the San Diego League of Conservation Voters and the Sierra Club San Diego Chapter. For campaign information please call (760) 839-9128, or send contributions to: Friends of Jerry Harmon, 1021 Madison Ave., Escondido, CA 92027|